Breakout Gap

379 views

Published on

www.CandlestickForums.com

Breakout Gap

Using Candlestick patterns as a guide, traders can identify and profit from trading a breakout gap in a stock.
In general terms a breakout gap is a discontinuous pattern in stock charting.

Published in: News & Politics
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
379
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
28
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Breakout Gap

  1. 1. Breakout Gap Bywww.CandlestickForums.com
  2. 2. Using Candlestick patterns asa guide, traders can identify and profit from trading a breakout gap in a stock. www.CandlestickForums.com
  3. 3. In general terms a breakoutgap is a discontinuous pattern in stock charting. www.CandlestickForums.com
  4. 4. It occurs when the prices of stocks break out from anarrow or congested range of trading. www.CandlestickForums.com
  5. 5. Typically the high stock pricefor the day and the low stock price for the day movegradually up and down day by day. www.CandlestickForums.com
  6. 6. A break out gap will be whenthe stock price seems to jumpout of the daily pattern, either up or down, out of consolidation pattern. www.CandlestickForums.com
  7. 7. The common experiencewhen a breakout gap occurs is that the stock will move up rapidly and substantially. www.CandlestickForums.com
  8. 8. Those who learn to read Candlestick pattern formations will be able toidentify that pattern and will typically be able to trade profitably. www.CandlestickForums.com
  9. 9. To learn both Candlestick analysis and specific tradingpatterns an excellent idea is to take an online basic stock market training class coupled with the Candlestick forum boot camp online. www.CandlestickForums.com
  10. 10. There are several types of gaps including runaway gaps,exhaustion gaps, and commongaps, as well as breakout gaps. www.CandlestickForums.com
  11. 11. In each case stock prices move quickly from a relatively continuous progression up, down, or sideways to a discontinuous jump up or down. www.CandlestickForums.com
  12. 12. In each case the price jumps leave gaps on stock charts. www.CandlestickForums.com
  13. 13. Those interested only in long term investing can really dislike gaps, unless the investor also is astute in technical analysis of stocks using Candlestick chart analysis. www.CandlestickForums.com
  14. 14. Although the long terminvestor will not buy stock andsell stock frequently he or she will be pleased to pick up a stock just before it goes up substantially in price. www.CandlestickForums.com
  15. 15. The trader, who routinely uses Candlestick charting techniques, will see a breakout gap and realize thathe or she may just be in trader heaven and ready to make a nice profit. www.CandlestickForums.com
  16. 16. Identification of a breakout gap not only helps stock traders but will be useful tostock options traders as well. www.CandlestickForums.com
  17. 17. An options trader whoindentifies a breakout gap andreliably predicts a rise in stock price in a timely manner may be able to profit from buying calls on the stock in question. www.CandlestickForums.com
  18. 18. The difference in buying calloptions instead of the stock is that the trader will hold theoption but not the obligation to buy. www.CandlestickForums.com
  19. 19. If the stock goes up in price as anticipated the trader will exercise the option for a profit. www.CandlestickForums.com
  20. 20. If the stock does not go up in price or goes down then thetrader will only lose the price of the premium paid for the option. www.CandlestickForums.com
  21. 21. In general, the more rare theoccurrence of this kind of gap the more reliable it is. www.CandlestickForums.com
  22. 22. For example, in a volatile stock market, daily gaps in stock price charting may be rather common. www.CandlestickForums.com
  23. 23. These, daily, gaps are lesspredictive than gaps that occur over a week. www.CandlestickForums.com
  24. 24. More so, gaps over a month,or a year can be substantiallymore predictive of large and rapid price moves. www.CandlestickForums.com
  25. 25. Thus the trader who is astutein reading a breakout gap may be able to profit substantially from the timely purchase of the stock in question. www.CandlestickForums.com

×